When a parent or someone close to you passes away, it can be an emotional time. Compounding the feelings of loss can be the uncertainty of what comes next: Who will make the funeral arrangements? Who will handle the decedents belongings? What will be the implications for me?
In some cases these questions may include a concern about immediate living arrangements, in others, about long term financial security, or in still other cases, simply inheriting a personally meaningful memento.
This Guide for Heirs explains the process of estate settlement, the role that heirs play in the process, and the overall timing of events.
When someone passes away, their possessions are distributed to the rightful heirs after any estate obligations such as debts and various taxes have been resolved. This process is known as estate settlement, and is typically overseen by an executor named in the will and confirmed by the court, or if there was no will, then by an executor appointed by the court.
A person can be entitled to inherit property for a variety reasons. You may be named in the will to receive a specific item (i.e., a bequest), you may be named in the will to share a percentage of the estate, you may be entitled to certain property regardless of the will (i.e., family entitlements), you may be named as a beneficiary of a certain account (e.g., IRA), and if there is no will, you may be entitled to a share of the estate due to your family relationship with the deceased (e.g., child, spouse).
Most estates go through probate and have an official executor who manages the process:
If an estate is small, there may be no need for probate or an official executor, and most states have simplified procedures for handling such estates, in which case the burden may fall to the heir to collect any inheritance: see Small Estates.
If you are entitled to an inheritance because you have been named a beneficiary of an asset that automatically transfers on death, such as an IRA, 401K, or life insurance policy, then any executor will not normally be involved at all. You will likely have to fill out a few paperwork items and should automatically receive your inheritance within a few weeks.
See Steps to Inherit for more information about the 4 primary inheritance methods.
Estate settlement is the process of collecting a decedent's assets, resolving debts, paying taxes, filing legal paperwork, and distributing remaining assets to the rightful recipients.
Probate is the court-supervised process of estate settlement, and it is the probate court that appoints an executor (usually in accordance with the terms of the will, if one exists) to manage the settlement process. Depending on jurisdiction and circumstances, the person in charge of this process may instead be called a personal representative or administrator, but to keep things simple, we will normally just use the generic "executor" term.
Not all estates require court involvement, but an estate will generally have to go through probate unless it contains only assets that automatically transfer to named beneficiaries, or if the estate qualifies to use one of the state-specific small estate procedures. If an estate does not go through probate, then there will be no official executor, but court approval may still be needed for any transfers of estate assets.
A somewhat simplified view of the overall estate settlement process, from the point of view of the executor, consists of the following overlapping steps:
Estate settlement takes time, and while settlement periods can vary dramatically according to individual circumstances, most estates take 12-18 months to settle (with more complex ones sometimes taking several years). In addition to all the work of inventorying the estate, selling off certain assets, resolving debts, and so forth, there are often waiting periods mandated by law to give interested parties a chance to notify the estate of relevant information (such as outstanding debts, family entitlement elections, etc.).
There are a number of factors that determine estate inheritances, including wishes expressed in a will, state law, designated beneficiaries, legal family relationships, and even executor discretion.
You may be entitled to inherit from an estate if:
Even if you are potentially entitled to inherit from an estate, however, there may be priority claims on the estate that could diminish or even eliminate your inheritance entirely, including estate debts, tax obligations, heirs with stronger claims, etc.
See Rules of Inheritance for details on inheritance factors and prioritization of estate proceeds.
You can click the links below, or in the table of contents to the left, to learn more about key aspects of the estate executor process. Aside from a number of checklist items, perhaps the central aspect of serving as an estate executor is resolving estate debts and distributing net assets to the heirs.
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